[Federal Register Volume 78, Number 104 (Thursday, May 30, 2013)]
[Notices]
[Pages 32496-32498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12796]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69629; File No. SR-CBOE-2013-054]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change To Amend Rule
6.42
May 23, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 13, 2013, Chicago Board Options Exchange, Incorporated (the
``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been
[[Page 32497]]
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend Rule 6.42. The text of the proposed
rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's
Office of the Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Rule 6.42--Minimum Increments
for Bids and Offers--regarding minimum increments of bids and offers
for complex orders. Currently, Rule 6.42(4) states that bids and offers
on complex orders may be expressed in any increment regardless of the
minimum increments otherwise appropriate to the individual legs of the
order. This language allows for complex order bids and offers to be
expressed in any increment whatsoever. The Exchange believes that
setting a minimum increment for bids and offers on complex orders of
$0.01 will ensure that there is a reasonable lowest minimum increment
for bids and offers that makes it simple to monitor and participate for
all market participants. As such, in order to limit this potential, the
Exchange hereby proposes to state that bids and offers on complex
orders, as defined in Interpretation and Policy .01 to Rule 6.42, may
be expressed in any net price increment that may not be less than $0.01
(as determined by the Exchange on a class-by-class basis and announced
to the Trading Permit Holders via Regulatory Circular) regardless of
the minimum increments otherwise appropriate to the individual legs of
the order. The addition of the ``(as determined by the Exchange on a
class-by-class basis and announced to the Trading Permit Holders via
Regulatory Circular)'' language will allow the Exchange to establish
such minimum increments on a class-by-class basis in order to ensure
uniformity of minimum bid and offer increments within a class (as the
Exchange may already do for bids and offers on complex orders in
options on the S&P 500 Index (``SPX''), p.m.-settled S&P 500 Index
(``SPXPM'') or on the S&P 100 Index (``OEX'' and ``XEO'')) as well as
ensure that Trading Permit Holders are notified of such minimum
increments via Regulatory Circular.
For example, the Exchange could release out a Regulatory Circular
stating that the minimum increments for complex order bids and offers
within a certain class would be $0.01. Or the Exchange could release a
Regulatory Circular stating that the minimum increments for complex
order bids and offers within a certain class would be $0.025, or even
that $0.01 and $0.025 increments could be used for complex order bids
and offers within a certain class (if, for example, such a class is
accustomed to trading on both penny increments and also 2.5-cent
increments). The Exchange could not, however, release a Regulatory
Circular stating that the minimum increments for complex order bids and
offers would be $0.005, or anything lower than $0.01.
The Exchange also proposes to make a similar change regarding
complex orders in SPX, SPXPM, OEX and XEO (the ``Specific Options'').
Currently, Rule 6.42(4) states that bids and offers on complex orders
in the Specific Options, except for box/roll spreads, shall be
expressed in decimal increments no smaller than $0.05 or in any
increment, as determined by the Exchange on a class-by-class basis and
announced to the Trading Permit Holders via Regulatory Circular.\3\
This ``any increment'' language would also allow for the Exchange to
determine that the minimum increment for bids and offers on complex
orders in one or more class of the Specific Options would be smaller
than $0.01. The Exchange desires to prevent the entry of bids and
offers on such orders from being smaller than $0.01 for some of the
reasons described above as well as to set a reasonable floor for such
bid and offer increments. As such, the Exchange proposes to amend this
language to state that bids and offers on complex orders in options on
the S&P 500 Index (SPX), p.m.-settled S&P 500 Index (SPXPM) or on the
S&P 100 Index (OEX and XEO), except for box/roll spreads, shall be
expressed in increments no smaller than $0.05 or in any net price
increment that may not be less than $0.01, as determined by the
Exchange on a class-by-class basis and announced to the Trading Permit
Holders via Regulatory Circular. The Exchange proposes to delete the
word ``decimal'' from before ``increments'' because the specification
of decimal increments is no longer relevant.
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\3\ See CBOE Rule 6.42(4).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\4\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \5\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \6\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange believes that
setting a minimum increment for bids and offers on complex orders of
$0.01 will ensure that there is a reasonable lowest minimum increment
for bids and offers that makes it simple to monitor and participate for
all market participants, thereby removing impediments to and perfecting
the mechanism of a free and open market.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The
[[Page 32498]]
Exchange believes that the proposed change will not impose an
unnecessary burden on intramarket competition because it applies to
bids and offers in complex orders from all market participants. The
Exchange believes that the proposed change will not impose an
unnecessary burden on intermarket competition because it applies only
to CBOE. To the extent that setting the lowest possible minimum
increment for bids and offers in complex orders at $0.01 may be
attractive to market participants at other options exchange, such
market participants are always welcome to become CBOE market
participants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. By order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2013-054 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2013-054. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549-1090, on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
CBOE-2013-054, and should be submitted on or before June 20, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12796 Filed 5-29-13; 8:45 am]
BILLING CODE 8011-01-P